If you’re at the point in your life where you’re focused on asset protection, you’ve likely spent years building up your wealth to get to this point. In working with an estate planning attorney, you will be able to develop an asset protection plan that shields your wealth from unforeseen circumstances, such as a lawsuit or attacks from creditors.
Here are a few tips that will help you develop an effective asset protection plan.
Have good insurance
This is the first and most crucial step to any asset protection plan. Most people understand the benefits of having health insurance, car insurance and homeowner’s insurance. But in the business world, there are professional insurance policies that can also be extremely important.
If you’re self-employed, for example, you’ll need special insurance policies to protect your assets. Doctors need to have malpractice insurance in case someone files a lawsuit against them. Other types of professionals, such as financial advisers and lawyers, can greatly benefit from errors and omissions insurance to protect them if a client attempts to sue them when they suffer losses, even if the loss wasn’t your fault.
Get asset management assistance
Find someone trustworthy who knows what they’re doing to help you with your asset management. Ever wonder why so many wealthy and successful people have teams of money managers and trustees? It’s because asset management can quickly become complex, and as a busy person yourself, you may have neither the time nor the expertise to handle your own financial affairs alone.
Separate your business and personal assets
You should always have separate business and personal bank accounts—not doing so is a good way to get audited. Using the correct business structure will also make it easier for you to create a more distinct separation between these assets, and to shield you from liability (depending on the structure you choose).
Be proactive with your asset protection planning
You must start planning your asset protection methods before someone files a claim against you. If you do so after a claim is already in progress, it will look like you are attempting to conceal your assets, which is illegal. Being proactive is absolutely crucial in successfully protecting your assets.
Don’t rely on bankruptcy protections
While bankruptcy can be used as a tool to protect some of your assets, it should never be a tool you need to rely on, and should only be used as a last resort. Keep in mind that although bankruptcy can stop some creditor harassment and discharge some of your debts, it will also wreck your credit and still leave you in some debt in most cases.
For more tips and information about developing a strong asset protection plan, contact an experienced estate planning attorney at Baker Law Group, PC.